The Indian Government has an ambitious programme of raising funds to the extent of Rs 40,000 crore in the current fiscal, through off-loading its stake in the profit making PSUs. Bharat Heavy Electricals (BHEL) has Rs 94,176 crore market capitalization at current market price of the shares and 5% offloading will fetch Rs 4,700 crore to the government at current level.

The government is working on proposed FPO (follow-on public offer) of BHEL and shortlisted 17 merchant bankers. After having a look on their presentations, the government will finalise the four or five merchant bankers for the proposed FPO.

The government held 67.72% stake in BHEL and its a profit making PSU with Rs 6,053.36 crore profit in FY 10-11.

This fiscal so far, the government has mopped up more than Rs 1,100 crore by divesting five per cent equity in Power Finance Corporation (PFC). In the last fiscal, disinvestments raked in Rs 22,762.96 crore, much lower than the set target of Rs 40,000 crore.

BHEL FPO is likely to come in next month or so. IPO is the first offer for purchase to public while issuing of shares to investors by a public company that is already listed on an exchange is called FPO. So applying for FPO is very similar to IPO application.